PCIT Vs Mahesh G Garodia (Supreme Court of India)
In PCIT v. Mahesh G. Garodia, the Supreme Court dismissed the Revenue’s SLP against the Bombay High Court judgment concerning the validity of penalty proceedings under Section 271(1)(c) of the Income-tax Act, 1961, where the Section 274 show-cause notice failed to clearly specify whether the penalty was proposed for concealment of income or furnishing inaccurate particulars of income. The Bombay High Court, following its Full Bench ruling in Mohd. Farhan A. Shaikh v. DCIT, held that such an ambiguous notice cannot constitute a valid foundation for imposing penalty, as the assessee must be clearly informed of the precise charge to enable an effective defence. The Revenue had argued that the penalty was ultimately imposed on both limbs and, therefore, no portion of the notice was required to be struck off, but the High Court rejected this contention and dismissed the appeal. The Supreme Court, on 31 July 2026, found no grounds to interfere with the High Court judgment and dismissed SLP (C) No. 26281/2026, while expressly observing that the “Question of law, if any, is kept open.” Accordingly, the Bombay High Court ruling remains undisturbed in the particular case, but the Supreme Court’s order should not be treated as a final authoritative determination settling the broader question of law.
